Ayodele Popoola

The decision to freeze an account often happens without warning or explanation. Customers suddenly notice they have no access to cash; their direct debits and standing orders are suspended. Most customers never find out exactly why their account’s caught the bank’s attention.  The court has on many occasions faulted banks for placing order on its costumer’s account without obtaining order authorizing them to do so.

The frozen of an account only suggests that certain activities cannot be carried out by the customer operating the bank account, for example, the account that is frozen can still accepts deposit but it cannot withdraw or transfer money. The account is under restriction and this can be very frustrating, embarrassing and nauseating. In simpliciter, whatever is deposited into the account stays put, it cannot go out until it is unfrozen.  This action may be predicated upon the fact that the account is used for fraudulent means; for any terrorist activity, money laundering etc.

Banks must monitor all customers’s accounts to ensure they are in strict compliance with the bank rules and regulations.  The bank cannot freeze customer’s account by mere directive from the Economic and Financial Crimes Commission, Section 34 [1] of the Economic and Financial Crimes Commission Act, 2004 states that the Commission has no power to give direct instruction to banks to freeze the account of a customer without an order of court.

The Central Bank of Nigeria Governor on his own accord lacks the power to order the freezing of any account, except by the Court who can give such order to banks to freeze customer’s account. It is an abuse of power for any agent of the government to issue directive to banks without obtaining court order.

In the recently decided case in Lagos, in Blaid Construction Limited and other v. Access Bank Plc – this action was instituted in 2017, the court decides as follows –

[  A ] That ICPC lacks the power to order the banks to place a post – no – debit order on banks without first obtaining an order of court;

[B] that the only time the claimant’s account was lawfully frozen was pursuant to the order obtained by the EFCC from the Federal High Court between 1 July 2016 and 30 September 2016and

[C] that the conduct of the bank to unilaterally freeze and place a post – no – debit alert is illegal and in reach of the banker – customer relationship between the parties.

Freezing of a customer’s Bank account without an order of court is challengeable in the court of Law because it is a breach of the customer’s fundamental rights to fair hearing, which is one of the twin pillars of natural justice (audi alteram patem) meaning both sides must be heard before concluding on any allegation.

I place heavy reliance on Section 36 of the 1999 Constitution of the Federal Republic of Nigeria as amended.

While Courts should also be wary of granting ex-parte motions on freezing Banks’ customers’ account because it still do not serve the overall end of Justice since the party whom the other is sought against will be unable to say his own side of his/her story and would be prejudiced by such ruling.

The laws and judicial precedence are clear on the process of freezing and several legislations have provided for freezing customer’s account in Bank yet none is permissible without an order of court just that most of those legislations requires overhauling due to plethora of inherent faults therein.

The reasons for a bank freezing a customer’s account could be as a result of suspicion of illegal activities e.g. money laundry, terrorist financing, writing bad cheques or other fraudulent activities associated with the customer’s account domiciled with the bank.

By virtue of sections 43 or 44 (1) (2)(e)(k) of the Constitution of the Federal Republic of Nigeria CFRN (1999) as amended, a customer’s account is both a constitutional and property right with regard to ownership of moveable property, unlawful interference or compulsory temporary taking of possession of the property is unlawful except justify by a judgment or an order of the court or for the purpose of any examination, investigation or enquiry.

A bank has no power or vires under any guise to unilaterally or inherently restrict, restrain, freeze or place a Post-No-Debit (PND) Alert on a customer’s account except by order of court first sought, obtained or had vis-à-vis the police cannot asked the bank to so do without the command from the court.

Consequently, where a bank freezes its customer’s account or places a PND on such customer’s account without recourse had to obtain a court’s order the act of the bank is null and void and the bank becomes liable to the customer for unlawfully infringement and interference with the customer’s property for which damages may arise against the bank or enforcement of the fundamental rights of the customer provided and protected by the (CFRN) 1999 constitution.

Even so, it is arguable whether in the face of a customer writing bad cheques should a bank awaits the order of the court to freeze the account? Yes! Because the bank cannot breach the law to enforce the law or take the laws into its hands or act unilaterally without an independent direction as a court order.

when a ‘court’ is hereby mentioned or referred to; reference stricto sensu is the court with competent jurisdiction. Therefore, in application for an order freezing account of an erring customer; it will not suffice that the court is Magistrate’s court.

The implication is that only the Federal/High Court of FCT or of a state has the competent power or jurisdiction not the magistrate court to freeze a customer’s account.

The law is  clear on the question of freezing of account where it stated in the case of Guaranty Trust Bank v. Mr. Akinsiku Adedamola (2019) 5 NWLR @ pg. 30 where the Court of Appeal held that before freezing customer’s Account or placing any form of restraint on any customer’s bank account, a bank must be satisfied that there is an order of the court…to freeze the account of a customer without an order of court, so doing constitutes flagrant disregard and violation of the right of a customer.

Proceeding further, it is pertinent to define freezing of bank accounts by financial institutions. Freezing of Accounts, otherwise known as Post-No-Debit order otherwise referred to as PND is an ORDER OF COURT directing and compelling a financial institution, whether a bank or mobile money operator to restrict any debits-withdrawal- of funds from a customer’s account.

This definition was given judicial blessings in the case of Blaid Construction Limited & Anor v. Access Bank Plc (FHC/ABJ/CS/132/2019). It is grossly immaterial whether or not the Claimant could make Deposits or not.

Similarly, it is trite that a customer is at liberty to open an account, domiciled with any banking institution of his or her choice, and the said banking institution, owes her customer a fiduciary duty to ensure that monies kept in such account are safe. See the case of Effiwat v. Barclays Bank (Nig) (1970) 2 All NLR, 26.

In addition to the aforesaid, the law is settled in the case of Guaranty Trust Bank vs. Adedamola (2019)5 NWLR (pt. 1664) 30 per Hon. Justice Tijanu Abubakar where the Court held that on the question of freezing of accounts, an order has to be obtained from the court and cause must be shown that the basis for the freezing must have been as a result of the account being used for fraudulent or criminal intents, and it is consequent upon that reason, that the laws allows such institution to obtain an order vide an application for freezing of the said account.

No law imposes a unilateral power on banks to unilaterally deal with the account of their customer(s) in any manner.

Similarly, it is apposite to reiterate the fact that by virtue of the law of contractual obligations, there exists a contractual relationship between the banks and her customers and the banking institution shall be in breach of her contractual obligations to the customer, in the event of disallowing the customer access his account and make use of it when he needed it most.

In a situation where a person can justifiably establish a case of unlawful and illegal freezing of his account by banking Institutions, the customer is entitled to general damages as required by the law.  See the case of Dauda. vs. Lagos Building Investment Company Ltd & Ors. (2010) LPELR-4024 (CA) where the Court noted that the action for general damages is always available as of right when a Contract has been broken.

Banks may freeze bank accounts if they suspect illegal activity such as money laundering, terrorist financing, or writing bad cheque.

Freezing of an account prevent any debit transactions; thus when an account is frozen, the account holder cannot make any withdrawals, purchases, or transfers, but he may be able to continue to make deposits and transfers into it – a Post No Debit (PND) red flag is placed on the account.

However, for sometimes, prosecutorial outfits such as the EFCC and ICPC have been in the habit of freezing accounts of individuals and groups without obtaining court order.

However, in the words of Justice Peter Lifu of the Federal High Court, this amounts to a gross and brazen violation of the individual’s fundamental rights to own, acquire and possess property.

In light of the above, the affected individual or group can approach the court and seek a declaration that the freezing of monies vested in the account maintained with the bank without any extant order of court from a competent jurisdiction, duly sought and obtained, violated the fundamental right of the person.

Therefore, this act of the bank can be set aside by the court.

The answer is no. A bank has no right to freeze a customer’s account without an order of court upon the application of EFCC or any other organization created to enforce laws against money laundering.
There must be an application to a court of competent jurisdiction first before such can be done.
By the provisions of section 34(1)of the Economic and Financial Crimes Commission Act,2004 no banks including the Central Bank of Nigeria have the power to give direct instructions to Banks to freeze the account of a customer without an order of court, so doing constitutes a flagrant disregard and violation of the rights of a customer.
If at any time an account was frozen before obtaining Court order to freeze their account, the customer may apply to enforce their fundamental right just as was seen in the case of G.T.B. Plc v. Adedamola (2019)5 NWLR (PT 1664) 30.
The order of court given upon the application filed shall be served on the bank for the freezing of the account.

Undoubtedly, the fiduciary relationship between a bank and its customer cannot overemphasized, it exists in such a way that the bank at all times owns her customer a fiduciary duty to  protect his account, money and other confidential pieces information contained therein.

Thus, the act of freezing a customer’s bank account without a valid court order is not only unconstitutional but a breach of the fiduciary duty that exists between the two parties.

To sum it up, a customer’s bank account can only be frozen by an order of a court which is often sought via an Exparte application depicting urgent reasons in the affidavit annexed therein why such an order should be granted.

Moreover, it should be noted the crux of granting such an  order is as a matter of urgency, and such, the applicant must substantially convince the court with a relevant facts while such order should be granted, this is premised on the fact that the court often feels so reluctant in granting an application of that nature, as it may somehow temper with the right to fair hearing of the respondents.

Finally, coupled with the aforementioned facts, it is pertinent to know that even law enforcement agencies(Police,EFFC, ICPC, e.t.c)have no right to freeze a suspect’s bank account without a valid court order as it is held in plethora of judicial authorities. So, where any customers bank account is being forzen without adhering to the due process of law, such an act is unconstitutional and the aggrieved party can run to court and seek for redress